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New Market Research Report: United Kingdom Real Estate Report Q1 2014

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2014-01-25 16:12:19 - Fast Market Research recommends "United Kingdom Real Estate Report Q1 2014" from Business Monitor International, now available

The UK's real estate sector has performed well since the property crash and recession took hold, despite experiencing two years of negative economic growth, in 2008 and 2009. Growth has been sluggish in the years since, but a healthy project pipeline and low vacancy rates, particularly in the office and retail segments, has bolstered investment and returns. However, a lack of short-term development in certain areas, such as office space in London, could lead to demand outstripping supply.

Office and retail space have been leading the charge in terms of real estate performance in the UK. London, as usual, posts the highest rental rates, with Old Bond Street continuing to be the most expensive shopping street in Europe. However, a slew

of projects, particularly, in the retail segment, have been getting under way in other areas of the country, such as Birmingham, Sheffield and Liverpool, diverting investment away from trophy assets in London and the South East. This is positive news in terms of job creation and funding dispersal. According to CBRE, office leasing activities in UK regional cities outside of London are at their highest for five years.

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Snowballing economic growth (with 1.4% forecast for 2014, increasing to 2.3% in 2017) is driving rental rates. However, there are fears that demand many begin to outstrip supply in certain areas, such as office space in London, with no short-term developments in the pipeline. The only UK city to have more than 200,000 sq ft of speculative space under construction is Manchester. Darren Yates, a partner at Knight Frank says: 'Vacancy rates are trending downwards due to a lack of development, and there is a real shortage of space in some cities.'

Recent Developments

* In December 2013, it was reported that Singaporean sovereign wealth fund GIC has entered into a joint venture (JV) agreement with British Land for a premier office complex in London. GIC will acquire a 50% stake in London's Broadgate estate from Blackstone Real Estate, while the remaining 50% will be retained by British Land. British Land will provide asset management for the JV, while its wholly owned subsidiary Broadgate Estates will offer day to day property management and occupier services.
* In December 2013, it was also reported that Hammerson and Aviva Investors have agreed to sell a shopping centre in Peterborough to US property firm Invesco Real Estate for around GBP202mn (US $329.76mn). The Queensgate Shopping Centre covers an area of 83,300sq m and consists of more than 110 stores and restaurants. The transaction is expected to be completed in early 2014.
* In December 2013, it was announced that Marks & Spencer (M&S) has acquired two adjacent distribution warehouse facilities at Sheffield International Rail Freight Terminal in South Yorkshire from CBRE Global Investors. The warehouses are on a 10-year full repairing and insuring lease and cover an area of 647,000 square feet. M&S will transfer the visual merchandise, store equipment and home furniture to the Sheffield facility from its distribution centre in Bradford. The quoted rent for the building was GBP4.50 (US$7.39) per square foot.
* In November 2013, it was announced that Westfield and Hammerson have secured preliminary approval for the redevelopment of a mall in south London. The local government council in Croydon voted to approve the Whitgift Centre project, a GBP1bn (US$1.6bn) project involving the two firms. The project will also include the development of up to 600 homes, offices and leisure facilities. Around 5,000 jobs are due to be created through the development.

Key BMI Forecasts

* Office rental rates in London will continue to rise over 2014, although low vacancy rates and lack of development in the capital could lead to demand outstripping supply.
* Retail rents in London are also forecast to increase, although more development is planned in this segment.

Industrial rents are anticipated to flatline in London, Manchester and Glasgow over 2014.

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at

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